Verifone Systems (NYSE: PAY) and Globant (NYSE:GLOB) are both small-cap it services & consulting – nec companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, valuation, risk, institutional ownership, dividends and analyst recommendations.

Insider and Institutional Ownership

68.3% of Globant shares are held by institutional investors. 1.2% of Verifone Systems shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Verifone Systems and Globant’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Verifone Systems $1.99 billion 0.97 -$9.28 million ($1.62) -10.68
Globant $322.86 million 4.39 $35.87 million $0.79 51.37

Globant has higher revenue, but lower earnings than Verifone Systems. Verifone Systems is trading at a lower price-to-earnings ratio than Globant, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings for Verifone Systems and Globant, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Verifone Systems 1 13 3 0 2.12
Globant 0 3 4 0 2.57

Verifone Systems presently has a consensus target price of $19.40, suggesting a potential upside of 12.14%. Globant has a consensus target price of $44.83, suggesting a potential upside of 10.48%. Given Verifone Systems’ higher probable upside, equities analysts clearly believe Verifone Systems is more favorable than Globant.

Profitability

This table compares Verifone Systems and Globant’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Verifone Systems -9.76% 11.19% 3.72%
Globant 8.61% 15.08% 10.96%

Volatility and Risk

Verifone Systems has a beta of 2.01, meaning that its stock price is 101% more volatile than the S&P 500. Comparatively, Globant has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500.

Summary

Globant beats Verifone Systems on 10 of the 14 factors compared between the two stocks.

Verifone Systems Company Profile

VeriFone Systems, Inc. offers payments and commerce solutions. The Company is engaged in designing, manufacturing, marketing and supplying a range of payment solutions and complementary services. It provides solutions and services for the retail point-of-sale (POS) that enable various forms of commerce. The Company’s segments include Verifone Systems and Verifone Services. The Verifone Systems segment delivers point of sale electronic payment devices that run the operating systems, security and encryption software, and certified payment software for both payments and commerce. The Verifone Services segment delivers device-related leasing and maintenance, payment transaction routing and reporting, and commerce based services, such as advertising on digital screens. The Company operates in various sectors, such as financial services, retail, petroleum, restaurant, hospitality, taxi, transportation and healthcare.

Globant Company Profile

Globant S.A. is a digitally native technology services company. The Company’s principal operating subsidiary is based in Buenos Aires, Argentina. During the year ended December 31, 2015, 83.7% of its revenues were generated by clients in North America, 11.0% in Latin America and Asia, and 5.3% in Europe. It builds digital journeys, which consists of different software products, including mobile apps, Web apps, sensors and other software and hardware appliances that work orchestrated by a backend that uses big data and fast data to create a understanding of each consumer and how to act upon each scenario. The Company delivers digital journeys with a comprehensive approach that includes Stay Relevant, which helps its customers stay fit for the future of their industries; Discover, which think and conceive specific digital journeys for each customer; Build, which creates each digital journey leveraging the work of its Studios, its services over platforms and its agile pods methodologies.

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